Issues
Current Market OutlookIf you’re looking at the trends of the major indexes, the price/volume action of leading stocks (both cyclical and growth) or the breadth of the overall market, it’s hard to find much to fault—the buyers are clearly in control as most stocks, sectors and indexes trend higher. About the only thing to worry about is that there’s not much to worry about; sentiment measures of all stripes (money flows, option activity, surveys) as well as some market action (huge moves in many speculative stocks) tell us that things are a bit hot and heavy right now. To be clear, that’s no reason to dramatically alter your game plan, but it’s a reminder that risk is rising, so keep your feet on the ground, look for good entry points and, once you’re in, honor your stops and book some profits (or partial profits) on the way up.
This week’s list features a wide mix of stocks, including many that have recently staged longer-term breakouts. One of those is our Top Pick: Applied Materials (AMAT) sports accelerating growth and a beautiful chart, and while short-term dips are possible, a major advance looks to be underway.
| Stock Name | Price | ||
|---|---|---|---|
| Applied Materials (AMAT) | 89.25 | ||
| Cleveland-Cliffs (CLF) | 12.62 | ||
| Pinduoduo (PDD) | 146.82 | ||
| Qorvo (QRVO) | 167.01 | ||
| Snowflake (SNOW) | 388.38 | ||
| Tapestry, Inc. (TPR) | 29.75 | ||
| Uber (UBER) | 53.80 | ||
| Vale S.A. (VALE) | 16.29 | ||
| United States Steel Corporation (X) | 17.20 | ||
| Zscaler (ZS) | 178.17 |
The bull market remains alive and well, and I continue to recommend that you be heavily invested in a diversified portfolio of stocks.
This week’s recommendation is a very small medical technology company focused on the business of processing and testing cells, as accurately and efficiently as possible. Long-term potential is big.
But to make room for it in the portfolio, something has to go, and this week it’s Digital Realty (DLR), which never really got going for us.
Full details in the issue.
This week’s recommendation is a very small medical technology company focused on the business of processing and testing cells, as accurately and efficiently as possible. Long-term potential is big.
But to make room for it in the portfolio, something has to go, and this week it’s Digital Realty (DLR), which never really got going for us.
Full details in the issue.
This month we’re jumping into a company that specializes in precision medicine for cancer.
It has developed a sequencing platform that is able to analyze over 20,000 genes, far more than most competitor solutions. Even better, this platform allows analysis of both tissue biopsies and liquid biopsies.
Ultimately, the company is going after a roughly $40 billion market. Yet its market cap is a mere $1 billion today.
This company is still unknown, but that’s likely to change as it brings new products to market and continues to transform the market for personalized cancer vaccines and next-gen cancer immunotherapies.
All the details are inside. Enjoy!
It has developed a sequencing platform that is able to analyze over 20,000 genes, far more than most competitor solutions. Even better, this platform allows analysis of both tissue biopsies and liquid biopsies.
Ultimately, the company is going after a roughly $40 billion market. Yet its market cap is a mere $1 billion today.
This company is still unknown, but that’s likely to change as it brings new products to market and continues to transform the market for personalized cancer vaccines and next-gen cancer immunotherapies.
All the details are inside. Enjoy!
The market remains in great shape, and even better, growth stocks have (mostly) avoided any further severe rotation in recent weeks, with more and more joining the party. There are a couple of bugaboos out there (especially sentiment, which has gotten giddy), but we continue to steadily put money to work as opportunities arise. Last week, we added a new half position in Halozyme (HALO), and tonight, we’re filling out our position in Uber (UBER), which looks like a fresh, early-stage leader to us.
Open up tonight’s issue for all our latest thoughts on the market, our stocks, some new ideas and the myriad longer-term breakouts we’re seeing across sectors and themes, which should bode well.
Open up tonight’s issue for all our latest thoughts on the market, our stocks, some new ideas and the myriad longer-term breakouts we’re seeing across sectors and themes, which should bode well.
Thank you for subscribing to the Cabot Undervalued Stocks Advisor. We hope you enjoy reading the December 2020 issue.
We briefly share our thoughts on the surging stock market and run through some valuation math that looks out a few years. Our conclusion: the market’s earnings growth, even side-stepping the pandemic’s effects, doesn’t look that impressive, while the market’s valuation is on the high side of average. It is starting to look like a good time to be pickier about which stocks to own.
With this thought in mind, we are moving Broadcom (AVGO) from a Hold to a Sell, as the shares have essentially reached our price target.
It’s been a fairly active month for a value-oriented newsletter, adding three new names and selling six, including Broadcom. This leaves the holdings list at 12 names. We anticipate expanding this roster over the next month or two, as there are many interesting value ideas out there.
We also tweaked the descriptions under the portfolio titles to more accurately reflect what types of stocks we look for. This should also help add some clarity to the differences between the two categories.
Please feel free to send me your questions and comments. This newsletter is written for you and the best way to get more out of the letter is to let me know what you are looking for.
I’m best reachable at Bruce@CabotWealth.com. I’ll do my best to respond as quickly as possible.
We briefly share our thoughts on the surging stock market and run through some valuation math that looks out a few years. Our conclusion: the market’s earnings growth, even side-stepping the pandemic’s effects, doesn’t look that impressive, while the market’s valuation is on the high side of average. It is starting to look like a good time to be pickier about which stocks to own.
With this thought in mind, we are moving Broadcom (AVGO) from a Hold to a Sell, as the shares have essentially reached our price target.
It’s been a fairly active month for a value-oriented newsletter, adding three new names and selling six, including Broadcom. This leaves the holdings list at 12 names. We anticipate expanding this roster over the next month or two, as there are many interesting value ideas out there.
We also tweaked the descriptions under the portfolio titles to more accurately reflect what types of stocks we look for. This should also help add some clarity to the differences between the two categories.
Please feel free to send me your questions and comments. This newsletter is written for you and the best way to get more out of the letter is to let me know what you are looking for.
I’m best reachable at Bruce@CabotWealth.com. I’ll do my best to respond as quickly as possible.
Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the December issue.
With the year-end approaching, investors often sell for reasons unrelated to a stock’s outlook. This month we describe some of these reasons, including tax-loss selling, window-dressing, performance bonus protection and the desire for a fresh start in the new year. We discuss seven stocks that look vulnerable to this type of selling yet seem likely to bounce once the selling pressure relents.
We also look at the airline industry – now in the throes of a near-term depression. We believe the outlook for a recovery is improving despite the recent “third wave” of rising Covid case counts. Clearly these stocks carry risks, most prominently that passengers don’t return to flying as much, even after a vaccine and other safety protocols should make flying safe again. Our discussion delves into some of the industry’s arcane metrics, as these help clarify (at least for those with a wonkish interest, like me) the drivers of the downturn and a likely recovery. We highlight five promising discount airline stocks.
Our feature recommendation is the office equipment company Xerox Holdings Corporation (XRX). The market tends to dismiss this company, but its robust cash flow, cash-heavy balance sheet, low valuation and 4.6% dividend yield offer strong value.
The letter also includes a summary of our recent sales of Peabody Energy (BTU), Weyerhaeuser (WY) and Barrick Gold (GOLD), our price target increase for Freeport-McMoran (FCX) and the full roster of our current recommendations.
Please feel free to send me your questions and comments. This newsletter is written for you. A great way to get more out of your letter is to let me know what you are looking for.
I’m best reachable at Bruce@CabotWealth.com. I’ll do my best to respond as quickly as possible.
With the year-end approaching, investors often sell for reasons unrelated to a stock’s outlook. This month we describe some of these reasons, including tax-loss selling, window-dressing, performance bonus protection and the desire for a fresh start in the new year. We discuss seven stocks that look vulnerable to this type of selling yet seem likely to bounce once the selling pressure relents.
We also look at the airline industry – now in the throes of a near-term depression. We believe the outlook for a recovery is improving despite the recent “third wave” of rising Covid case counts. Clearly these stocks carry risks, most prominently that passengers don’t return to flying as much, even after a vaccine and other safety protocols should make flying safe again. Our discussion delves into some of the industry’s arcane metrics, as these help clarify (at least for those with a wonkish interest, like me) the drivers of the downturn and a likely recovery. We highlight five promising discount airline stocks.
Our feature recommendation is the office equipment company Xerox Holdings Corporation (XRX). The market tends to dismiss this company, but its robust cash flow, cash-heavy balance sheet, low valuation and 4.6% dividend yield offer strong value.
The letter also includes a summary of our recent sales of Peabody Energy (BTU), Weyerhaeuser (WY) and Barrick Gold (GOLD), our price target increase for Freeport-McMoran (FCX) and the full roster of our current recommendations.
Please feel free to send me your questions and comments. This newsletter is written for you. A great way to get more out of your letter is to let me know what you are looking for.
I’m best reachable at Bruce@CabotWealth.com. I’ll do my best to respond as quickly as possible.
The past month has been the best of the year for our marijuana stocks, and while there’s a chance the sector could top out now (there’s so much good news out there), I learned long ago that it doesn’t pay to fight the trend.
The fact is, this sector strength could easily run to the end of the year as investors rush into this high-growth sector. So, we’ll now become fully invested, adding one new stock at the same time.
Full details in the issue.
The fact is, this sector strength could easily run to the end of the year as investors rush into this high-growth sector. So, we’ll now become fully invested, adding one new stock at the same time.
Full details in the issue.
The euphoric vaccine rally has driven the market indexes to all time highs. A vaccine likely means the end of the pandemic, sooner rather than later. The removal of the remaining lockdown restrictions should unshackle the economy and bring on a full and robust recovery.
A full recovery will lift those stocks and sectors that depend on the Main Street economy. It will lift cyclical sectors like energy, finance and hospitality that had not participated in the partial recovery. It’s already happening. The losers of the earlier stock market recovery are on fire.
In this issue I highlight one of the best banks in the country. It is a highly desired stock that should be very quick to recover. The stock has strong momentum and is still priced well below the 52-week high. This issue also highlights two covered call opportunities to cash in on the market rally.
A full recovery will lift those stocks and sectors that depend on the Main Street economy. It will lift cyclical sectors like energy, finance and hospitality that had not participated in the partial recovery. It’s already happening. The losers of the earlier stock market recovery are on fire.
In this issue I highlight one of the best banks in the country. It is a highly desired stock that should be very quick to recover. The stock has strong momentum and is still priced well below the 52-week high. This issue also highlights two covered call opportunities to cash in on the market rally.
Updates
Remain bullish. There are some cracks in the market’s armor, with some major indexes softening and the broad market under more and more pressure. However, our two trend-following indicators are positive and most leading growth stocks are acting fine. While we’re keeping a close eye on our stocks and will take action if necessary, we’re not making any major moves tonight.
I don’t have any ratings changes today, but read on for updates on all our holdings, most of which are still rated Buy.
I’m plucking my Bank of America (BAC) stock review out of the Growth Portfolio section, and putting it right here in the editorial section of the weekly update. That’s because good news affecting BAC will also affect virtually all bank stocks.
Broadly speaking, the market has been sketchy. Small caps have been trending down since early October, and the pace of the decline accelerated over the past week. In the grand scheme of things, this isn’t surprising. The September advance was incredibly strong, and a pull-back to the small cap index’s 50-day line isn’t remotely alarming.
The iShares EM Fund (EEM) is holding above its 50-day moving average, which keeps the Cabot Emerging Markets Timer positive. And we’re encouraged by the rebound in Chinese stocks as a group. Five stocks in the portfolio are scheduled to report earnings in the next couple of weeks (and the sixth likely will as well). We have no changes tonight.
REITs have strengthened since our last update, despite the near-certainty that the Fed will hike rates next month. The strongest performers include residential, data center and storage REITs, and a select group of retail REITs. Utilities, industrials and health care stocks have also had a good week, while financials and materials stocks have stumbled.
Many companies reported earnings this week, including many of our recommendations. In this week’s update, I update my position on eight stocks.
While things are a bit giddy in the short-term and we’re still in the midst of earnings season (three of our stocks release their numbers tonight or tomorrow), our trend-following indicators bullish and growth stocks are acting great. Thus, you should keep your optimist’s hat on.
After stumbling last Wednesday, the market is back on its feet, with the major indexes all hitting new highs in recent days. Technology stocks have led the way, a reversal of the Dow outperformance we’d seen over the past two weeks.
Many stocks are rising—either toward former highs, or surpassing recent highs—because the companies are growing profits very well. It’s not “Trump,” nor “irrational exuberance,” nor “a lack of other good investment markets.” It’s simply strong earnings growth.
It’s been another sideways week in small-cap land. The S&P 600 index is essentially unchanged from last week, and despite some cross-currents under the surface, is holding firm just above 910.
The iShares EM Fund (EEM) is holding above its moving averages, which keeps the Cabot Emerging Markets Timer a bright green. But the weakness in Chinese stocks is hitting the portfolio hard. In response, we have six moves today.
Alerts
The broad market has advanced nicely since mid-day Monday when news that the Fed might lower interest rates sparked a wave of buying. Long-term, the future is bright. But short-term, the portfolio is happy holding a cash level of 23%, deferring new buying.
This recent IPO stock was just named and IBD (Investor’s Business Daily) Breakout Stock, which highlights stocks in or near a buy zone.
The top five holdings of this fund are: Mastercard Inc A (MA, 3.64%); Microsoft Corp (MSFT, 3.43%); PayPal Holdings Inc (PYPL, 3.36%); Visa Inc Class A (V, 3.11%); and Bank of America Corporation (BAC, 2.70%).
Today, we are recommending a gold company and selling two ETFs.
The market suffered another round of selling today, and this time it was concentrated in the Nasdaq and many resilient growth stocks.
This software company is forecast to grow 25.25% annually, over the next five years.
This telecom beat Wall Streets’ estimates by $0.15 last quarter and fifteen analysts have increased their EPS forecasts for the company in the last 30 days.
This building products supplier is expected to grow by 18.7% next year.
The market was hit hard again today as investors continued to discount a protracted trade war between China and the U.S., with fears of slowing growth bringing out the sellers.
Abercrombie & Fitch (ANF) reports first-quarter 2019 results.
Portfolios
Strategy
A few Cabot Options Trader subscribers have asked me about ways to protect gains in their portfolios, so I thought I would write to everyone with a couple of strategies using options to hedge your portfolio.
A subscriber recently asked me if I keep a journal of my trades. Many traders keep journals so they can look back at their trades and evaluate what they did right and what they did wrong.
Want to know how the big institutional investors use options? Here is an example of how one trader spent $132 million on three technology stocks.
Options trading has its own vernacular. To know how to do it, you need to know what every options term means. Here are some of the basics.
Our Cabot Top Ten Trader’s market timing system consists of two parts—one based on the action of three select, growth-oriented market indexes, and the other based on the action of the fast-moving stocks Cabot Top Ten features.